The long-term impact of a resource-based fiscal windfall: Evidence from the Peruvian canon

Abstract

This paper examines the long-term impact of the canon, a resource-based transfer, on local living conditions in Peruvian municipalities. We use the most recent data and several identification strategies with cross-section and panel data. We find no evidence of significant improvements in access to public services, poverty, or inequality. This negligible impact occurs, even though we observe sizable increases in municipalities’ revenue, personnel, and equipment. We only observe some suggestive, albeit weak, evidence of increased infrastructure projects in local areas, such as the construction and repair of urban roads.